Apple Kills Off Its Buy Now, Pay Later Service Barely a Year After Launch
Apple is discontinuing its buy now, pay later service known as Apple Pay Later barely a year after its initial launch in the U.S., and will rely on companies who already dominate the industry like Affirm and Klarna. It’s an acknowledgement from a company known for producing hit products that building a financial services business from scratch as Apple has been doing for several years is difficult and highly competitive. Apple Pay Later launched with fanfare in March 2023 as a way for iPhone customers to split purchases of up to $1,000 into four equal payments with no fees or interest. The service was Apple’s answer to the growing popularity of buy now, pay later services globally. [Associated Press]
Credit Card Delinquencies Are Up Year-Over-Year, But That’s Not the Whole Story
Retail sales numbers came in a bit lower than expected yesterday, with consumer spending inching up just 0.1% from April to May. It’s another sign that consumers are starting to feel the strain of sustained higher prices. Many consumers have been keeping their shopping habits up by relying on credit cards, perhaps a bit too much. Economists have been warning for months now about the rise in credit card delinquencies. Wealthier consumers are paying off cards and paying down credit card debt, boosting their scores. But that lower consumer is increasingly falling behind on their credit balances and that’s really where we’re seeing the localization of the increased delinquencies. [Marketplace]
Wells Fargo Bet on a Flashy Rent Credit Card. It Is Costing the Bank Dearly.
When Charlie Scharf became CEO of Wells Fargo, one of his key priorities was to expand the bank’s credit card business. However, a high-profile partnership with Bilt Technologies is reportedly complicating this strategy. In 2022, Wells Fargo launched a credit card with Bilt Technologies, a fintech startup backed by big names such as Blackstone and Mastercard. This co-branded card allowed users to pay rent without incurring landlord fees and earn rewards points, resulting in over one million accounts being activated within 18 months, predominantly by young adults. Despite its popularity, the card is costing Wells Fargo up to $10 million monthly, as internal projections about cardholder behavior proved inaccurate, according to a report. [The Wall Street Journal]
I’m an Online Gambler. Pennsylvania Lawmakers Are Right to Ban the Use of Credit Cards to Fund Bets.
My father was a compulsive gambler. I am a gambler, and I have occasionally used a credit card to find an online gambling account in Pennsylvania. State Sen. Wayne Fontana wants to prevent me or anyone else from doing that. He is right. The longtime suburban Pittsburgh lawmaker recently introduced Senate Bill 1159, intended to reduce some of the worst financial harm from gambling addiction. It would bar credit cards as the vehicle to deposit funds in accounts with any of the many online Pennsylvania casinos or sportsbooks. Credit cards would also no longer be an option to cover accounts playing the state’s iLottery via phone or computer. Fontana doesn’t want to take away anyone’s right to bet legally. But he wants players restricted to using only funds they already have, such as through debit cards, bank transfers, or PayPal. [Philadelphia Inquirer]
Proposed Visa and Mastercard Swipe-Fees Settlement Is Likely to Be Thrown Out
A federal judge said she was unlikely to approve a proposed settlement in a long-running lawsuit that alleges Visa, Mastercard and large U.S. credit-card issuers restrict competition over the fees merchants pay when they accept credit cards. Visa and Mastercard both said they were disappointed and that they still think the proposed pact was a good solution. The settlement, reached in March, would have brought an end to a battle between the card networks and the banks with merchants that have been suing them for nearly two decades. But the terms were criticized by big-merchant lawyers and trade groups that vowed to kill the deal. [The Wall Street Journal]
Lawsuit Over U.S. Credit Card Late Fees Rule Must Stay in Texas, Court Rules
The CFPB on Tuesday suffered a jurisdictional setback in a lawsuit challenging its new rule capping credit card late fees at $8 when a federal appeals court held the case should stay in Texas and not be sent to a judge in Washington, D.C. The ruling by a three-judge panel of the New Orleans-based 5th U.S. Circuit Court of Appeals was a victory for business and banking groups challenging a key part of the crackdown by President Joe Biden’s administration on “junk fees.” [Reuters]
Google Ads Phasing Out Card Payments
Google is notifying some advertisers that they must transition away from paying for Google Ads via credit or debit card by July 31 or face account suspension. The move is part of Google’s effort to steer high-spend advertisers toward more automated payment methods better suited for scaling ad investment. Impacted advertisers will only be allowed to use bank-based payment options going forward: monthly Invoicing (Google’s recommended approach) with 30-day payment windows or Direct Debit for Automatic Payments, where available. [Search Engine Land]
Male Consumers Top Gift Card Buyers
The male consumer is the primary gift card buyer in the U.S. for the first time, according to a Blackhawk Network research report on consumer gift card and gifting preferences among U.S. consumers. The research also highlights the opportunities everyday gifting presents for retailers and how an industrywide shift to more sustainable gifting is resonating with consumers. While men and women are similar in the types of gift cards they plan to purchase in the next year (e.g., single brand vs. multi-brand cards), men tend to purchase more gift cards to electronics and video game retailers than women, who reported purchasing personal care and beauty cards more than men. Gift card purchases have also gone from a go-to last-minute gift to a planned purchase with 71% of surveyed consumers reporting their gift card purchases are planned. [Retail Customer Experience]
Biometrics Cutting the Line of In-Person Payments Innovations: Mastercard
Mastercard is also introducing capabilities for consumers to add payment cards to their digital wallet by tapping it on their own smartphone. Merchants can also add tapping a card to a phone holding a digital wallet as an additional authentication layer. Payments with biometrics instead of a phone or card are also on Mastercard’s roadmap. The company wants to let consumers choose how they register their payment method to their biometrics. Behavioral biometrics are also part of Mastercard’s plan, in addition to physical biometric modalities like palm and face. [Biometric Update]
For Credit Cards, Smaller Government Is Better
One such policy that’s being pushed in the US Senate is a bill that would create credit card mandates. A version of this very legislation was passed in 2010 and applied to debit cards. The results to the user were: lost debit reward points, lost access to free checking accounts, and some lost their local bank entirely. In addition to resurrecting a policy that history has proven to be a failure, studies have shown that applying this same concept to credit cards will come with a $5 billion price tag due to it expanding the role of the federal government in credit card processing. And, as you and I both know, when government’s role expands, taxpayers are the ones footing the bill. [Winchester News Gazette]
0% Credit Card Intro Rate Offers: The Pros, Cons and What Lenders Are Banking On
Why are banks and credit unions still offering 0%? Well, the odds are good that you’ll underestimate how quickly you could pay off that debt, and you will get stuck with high credit card rates once again. The lenders typically get a fee for a balance transfer, and they lure customers away from competitors. Anyone who is banking on seeing their credit card rates fall significantly in six months or so, once the Fed begins cutting interest rates, is going to be sadly disappointed. Even if the first rate cut hits in September, and some say it might not take place until December, interest rates will gradually pull back, not plummet, from here. Shopping around to snag an introductory rate of 0% could indeed make sense, if you stop spending and aim to pay off as much of the credit card debt as possible in less than a year or two. [Detroit Free Press]
Read the full article here
